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Real Estate Advertising Complaints on the Increase by Tom Adams, Assistant Commissioner, Investigations of the Arizona Department of Real Estate and K. Michelle Lind, AAR General Counsel Posted: November 2005 ~ Reviewed December 2007 |
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The Arizona Department of Real Estate (“ADRE”) receives
numerous advertising complaints each month. The ADRE
investigates advertising complaints and takes action against those
licensees whose advertising violates the ADRE Commissioner’s Rules, so
it is important to be familiar with the advertising laws and ensure that
your advertising is in compliance. Advertising is broadly defined and highly regulated Advertising means “the attempt by publication, dissemination, exhibition, solicitation or circulation, oral or written, or for broadcast on radio or television to induce directly or indirectly any person to enter into any obligation or acquire any title or interest in [property] and any photographs, drawings or artist's presentations of physical conditions or facilities existing or to exist on the property.” A.R.S. §32-2101(2). Nearly anything salespersons or brokers do to circulate their names among people, other than “keep in touch” or “thank-you” items such as gifts or birthday cards to clients, falls under the definition of advertising. The Commissioner’s Rules, A.A.C. R4-28-502, set forth the rules for all advertising. A salesperson or broker acting as an agent is prohibited from advertising property in a manner which implies that no salesperson or broker is taking part in the offer for sale or lease. The designated broker must supervise all advertising, however, associate brokers and salespeople are responsible for insuring that their advertising is in compliance with the Rules. The employing broker’s name must be “clear and prominent” in all advertising All advertising must identify in a “clear and prominent manner the employing broker's legal name or the licensed dba name.” The employing broker is the corporation, limited liability company, partnership or sole proprietorship licensed as a broker that has engaged the services of salespersons and associate brokers. The employing broker designates a natural person to act as the designated broker. The requirement that all advertising identify the employing broker’s name in a “clear and prominent manner” is by far the most common subject of complaints. Although the Rules do not specify precisely what constitutes “clear and prominent,” Webster defines prominent as “thrusts itself into attention” or “conspicuous in position or importance.” A primary guideline to consider when creating an advertisement is that the employing broker represents the client in the transaction and the associate broker or salesperson represents the employing broker. This relationship must be indicated in the advertisement; that is, the ad must be clear that the employing broker is involved in the process. Consider the following guidelines:
Web sites or emails that target Arizona residents with the offering of a property interest or real estate service also constitute advertising and is a regulated activity. A.R.S. §32-2163(D) and A.A.C. R4-28-502(L). The employing broker’s name must be visible on the first page of the web page, without the necessity of scrolling down, regardless of the screen size of the computer. Web pages should identify the broker on each page because it is possible to link to a single page and, if that is done, the broker’s name needs to be visible. In contrast, if the employing broker produces a magazine that includes only the broker's listings, the broker can be identified on just the front cover, not every page, because a consumer picks up the whole magazine, not just one page. Teams must comply with the same advertising rules A real estate salesperson or broker may use the terms “team” or “group” to advertise and promote real estate services if the team or group is comprised of licensed real estate salespersons or brokers who are employed by the same broker. When advertising as a team, the same advertising rules apply as when advertising as an individual broker or salesperson. All team advertising must identify the employing broker in a clear and prominent manner. For example, placing “The (Team Name) Team” at the top of the page in large letters with a much smaller brokerage symbol somewhere below (often at the bottom of the page) is not sufficient. The ad must be clear that the team is a part of the brokerage. Other Advertising Rules In addition, the Rules also require that:
When the ADRE determines that an advertisement is in violation of the Rule, the ADRE will hold both the salesperson or associate broker and the designated broker responsible. Penalties for advertising violations can include monetary fines, suspension or revocation of a license, denial of the issuance or renewal of a license, issuance of a Letter of Concern or issuance of a provisional license. The ADRE will often first issue both the salesperson or associate broker and the designated broker a Letter of Concern, which will be placed in the salesperson’s and broker’s file. A “Letter of Concern” is an advisory letter to notify a licensee that, while the conduct or evidence does not warrant other disciplinary action, the Commissioner believes that the licensee should modify or eliminate certain practices and that continuation of the activities may result in disciplinary action against the licensee. A.R.S. §32-2153(F)(1). Further violations will generally result in disciplinary action, with the Letter of Concern as part of the evidence indicating the licensee was made aware of the violation and supporting the discipline. Tip: The ADRE is interested in obtaining compliance, not in initiating discipline. Take an extra few minutes to review your advertisements to ensure they meet the requirements of the law. If you have any questions about the legality of your advertising, contact your broker or the ADRE for guidance. If you have any questions about the legality of your advertising on the Web, the ADRE will review it for compliance. Contact Tom Adams at 602.468.1414. Be sure to have your link, ad copy or URL handy when you call. Tom is Assistant Commissioner, Investigations Division of the Arizona Department of Real Estate. Michelle is general counsel to the Arizona Association of REALTORS® and a State Bar of Arizona board certified real estate specialist. K. Michelle Lind, Esq. K. Michelle Lind is General Counsel/Assistant CEO to the Arizona Association of REALTORS® (AAR). She serves as the primary legal advisor to the association. Michelle oversees AAR’s Risk Management Committee, which includes professional standards administration for twenty of the state’s local REALTOR® associations, and the development of standard real estate forms. She is the author of Arizona Real Estate: A Professional’s Guide to Law & Practice and a regular contributor to the Arizona REALTOR® and the Arizona Journal of Real Estate & Business. Please note that this article is of a general nature and may not be updated or revised for accuracy as statutory or case law changes following the date of first publication. Further, this article reflects only the opinion of the author, is not intended as definitive legal advice and you should not act upon it without seeking independent legal counsel. |
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